U.K. company bidding for Pa. Lottery known for aggressive sales practices

Wednesday

Dec 26, 2012 at 12:01 AM

A British company looking to take over the day-to-day operations of the Pennsylvania Lottery has come under fire on its home soil for aggressive business practices. But it has pumped up sales and revenue for the U.K.'s National Lottery, which it has operated since the lottery's creation in 1994.

The Morning Call

A British company looking to take over the day-to-day operations of the Pennsylvania Lottery has come under fire on its home soil for aggressive business practices. But it has pumped up sales and revenue for the U.K.'s National Lottery, which it has operated since the lottery's creation in 1994.

The Camelot Group, acting through a newly created subsidiary, Camelot Global Services PA LLC, submitted the lone bid to assume management duties at the Pennsylvania Lottery, which funds programs for senior citizens across the state.

In its bid materials, Camelot has said it would guarantee nearly $34 billion in profits over the life of a potential 20-year management agreement. Since its creation 40 years ago, the lottery has generated $22.6 billion in profits.

Camelot has a consulting agreement with the California Lottery, where it says sales have grown by $400 million since it began working with the state in 2002. Two other states, Illinois and Indiana, also have privately managed lotteries.

According to press accounts in England, Camelot has a record of increasing sales. The company sold tickets costing £2.4 billion through Sept. 19, which equates to $3.87 billion, for an increase of about 3.4 percent from the same six months in 2011.

Similar to the Pennsylvania Lottery's mandate, the company is charged with turning over lottery proceeds to worthy causes, giving a record £953 million, or $1.53 billion, to charities, an increase of 4 percent, The Independent newspaper reported last month.

The Camelot Group's transparency came into question in October 2011, when it came under fire for refusing to release information showing how much money spent on National Lottery tickets went to specific areas across England.

Citing 1999 sales data, The Guardian newspaper reported that some regions received four times as much for charity as local residents spent on tickets, while others received less than 1 percent of what area residents spent.

A Camelot spokeswoman told the newspaper that while the company was responsible for generating money for charity, to the tune of about $48.3 million a week, it played no role in where the money was distributed and did not maintain such data.

In 2011, the company was accused of targeting children when it rolled out a line of scratch-off cards based on such kiddie board games as Monopoly and Connect 4, The Daily Mail newspaper reported. The cards, which offer instant jackpots of as much as £1 million, are often placed in shops alongside such impulse buys as candy and chewing gum, the newspaper reported.

In England, the minimum age for buying scratch-off cards is 16, and the lottery places the onus on shopkeepers to decide which customers are underage, the newspaper reported.

And in October 2000, billionaire English businessman Richard Branson accused Camelot of "hounding" then-National Lottery Commission Chairwoman Helena Shovelton from office. At the time, Branson, the founder of the Virgin family of companies that includes Virgin Mobile and Virgin Airways, was locked in a fight with Camelot to operate the national games.

The company has been laying the groundwork for its push since the early days of the Corbett administration.

Camelot's North American division, Camelot Global Services, headquartered in Sacramento, Calif., filed lobbying registration paperwork with the Department of State in April 2011, barely three months after Corbett was sworn into office, documents show.

Between July 2011 and June 2012, Camelot Global Services spent $194,993 to lobby Pennsylvania state government, according to lobbying disclosure documents filed with the Department of State. Between July 2011 and June 2012, Camelot spent an average of $48,947 every three months on lobbying expenses.

Records show that Camelot Global Services hired one of Harrisburg's most influential lobbying firms, Greenlee Partners, to pursue its case in the Capitol. Veteran Republican political consultant Ray Zaborney also was hired by the company to help it navigate the halls of power.